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HomeMy WebLinkAboutItem 34 - Appointment of Interim City Manager City Attorney’s Office www.santa-ana.org/city-attorneys-office Item # 34 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report November 21, 2023 TOPIC: Appointment of Interim City Manager AGENDA TITLE Appointment of Interim City Manager pursuant to Government Code Section 21221(h)(Interim City Manager)(General Fund) RECOMMENDED ACTION Adopt Resolution appointing an Interim City Manager effective November 21, 2023 and authorizing the Mayor to execute an employment agreement (Agreement No. 2023- XXX). RESOLUTION NO. 2023-XXX entitled A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPOINTING THOMAS R. HATCH AS CITY MANAGER ON AN INTERIM BASIS AND APPROVING EMPLOYMENT AGREEMENT GOVERNMENT CODE §84308 APPLIES: No DISCUSSION The City Council accepted the former city manager’s resignation on October 9, 2023. Assistant City Manager Steven A. Mendoza has served as Acting City Manager since October 17, 2023. On November 7, 2023, the City Council discussed the potential appointment of an Interim City Manager while the City recruits for a permanent appointment to the City Manager position. The City Council understands that the recruitment process will take several months, if not longer, and believes that appointment of Thomas R. Hatch as Interim City Manager would be in the City’s best interest during the recruitment process for a permanent appointment. The position of City Manager requires specialized skills and Mr. Hatch has such skills with more than 35 years of experience in local government including as City Manager and Interim City Manager for agencies in Orange County and Los Angeles County. Appointment of Interim City Manager November 21, 2023 Page 2 3 8 9 3 Mr. Hatch is a CalPERS retiree and as such, his appointment must comply with the working after retirement rules set forth in the Government Code and CalPERS Regulations, including limiting payment to an hourly rate pursuant to an adopted salary range. Interim City Manager Appointment Government Code Section 21221(h) permits the City Council to appoint a CalPERS retiree to a vacant position requiring specialized skills during recruitment for a permanent appointment, and provides that such appointment will not subject the retiree to reinstatement from retirement or loss of benefits so long as it is a single appointment that does not exceed 960 hours. The rate of pay for an Interim City Manager who is retired from CalPERS is dictated by law and governed by Government Code Sections 21221(h) and 7522.56. Specifically, Section 7522.56(d) – which supersedes Section 21221(h) to the extent of conflicts – provides that “the rate of pay for the employment shall not be less than the minimum, not exceed the maximum, paid by the employer to other employees performing comparable duties, divided by 173.333 to equal an hourly rate.” Section 21221(h) further provides that this rate must be “listed on a publicly available pay schedule for the vacant position.” The City Manager’s salary is set by contract and is reflected as a fixed amount on the City’s publicly available pay schedule, not a range. Thus, the hourly rate to be paid to Mr. Hatch, as Interim City Manager, will be a pay rate of $156.82. He will not receive any other compensation or benefits, unless required by federal or state law. Government Code Section 21221(h) further requires that the appointment to a vacant position be made by the City Council. As such, this agenda item includes a resolution appointing Thomas R. Hatch as Interim City Manager effective November 21, 2023, and authorizing the Mayor to sign an employment agreement for interim city manager services with Mr. Hatch consistent with the requirements of Section 21221(h) and the terms set forth in the resolution. The term of Mr. Hatch’s appointment as Interim City Manager will end when the permanent appointment to the City Manager position begins his or her employment with the City, unless the appointment is terminated earlier by the City or Mr. Hatch. The key terms of the Interim City Manager appointment include the following: 1. The term of employment will begin November 21, 2023 and will end immediately before the day on which the permanent City Manager begins work, unless sooner terminated by the City or Mr. Hatch; 2. Hourly rate will be $156.82; Appointment of Interim City Manager November 21, 2023 Page 3 3 8 9 3 3. No other compensation or benefits, including leave, will be provided, unless required by state or federal law; and 4. Mr. Hatch will be limited to 960 hours per fiscal year as set forth in working after retirement rules set forth in the Government Code and CalPERS Regulations. FISCAL IMPACT Mr. Hatch will be paid an hourly rate of $156.82 during his appointment as Interim City Manager. He will not be entitled to any additional compensation, benefits, paid leave or paid holidays, unless required by federal or state law. Funds are available in the City Manager’s Office salaries and benefits account (Account No. 01103010- 61000) and to the extent necessary will be budgeted in future fiscal years as follows. Future fiscal year funding, if needed, will be included in the proposed budget for City Council consideration. EXHIBIT(S) 1. Resolution to Appoint Interim City Manager 2. Employment Agreement Submitted By: Sonia R. Carvalho, City Attorney Approved By: Steven A. Mendoza, Acting City Manager Resolution No. 2023-XXX Page 1 of 3 RESOLUTION NO. 2023-XXX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPOINTING THOMAS R. HATCH AS CITY MANAGER ON AN INTERIM BASIS AND APPROVING EMPLOYMENT AGREEMENT WHEREAS, Government Code sections 7522.56 and 21221(h) permit the City of Santa Ana (“City”) to appoint a California Public Employees’ Retirement System (“CalPERS”) retiree to a vacant position requiring specialized skills during recruitment for a permanent appointment, and provides that such appointment will not subject the retiree to reinstatement from retirement or loss of benefits so long as the applicable requirements are met; WHEREAS, in order to ensure continuity in the operation and management of the City, the City Council desires to retain the services of Thomas R. Hatch, who is a retired member of CalPERS, to serve as Interim City Manager effective November 21, 2023; WHEREAS, The City Council deems that the position of City Manager requires specialized skills and that, Thomas R. Hatch has such skills as evidenced by his extensive experience in managing, directing and overseeing an organization like the City, given his prior employment as City Manager and Interim City Manager for several cities in Orange County and Los Angeles County; WHEREAS, an appointment under Government Code section 21221(h) requires an active recruitment for a permanent replacement and the City has an active recruitment; WHEREAS, the 180-day wait period requirement set forth in Government Code Section 7522.56(f) does not apply because Thomas R. Hatch has been retired from a CalPERS agency for more than 180 days; WHEREAS, this section 21221(h) appointment shall only be made once and therefore will end on the date immediately before the date on which the permanent replacement for the vacant position of City Manager begins his or her employment or, if earlier, the date that this appointment is terminated by the City Council or Thomas R. Hatch; WHEREAS, it is understood by the City Council and Thomas R. Hatch that the combined total hours to be worked by Mr. Hatch in any fiscal year, for all retired annuitant positions with any CalPERS employer, shall not exceed the 960 hour limitation set forth in California Government Code sections 7522.56(d) and 21221(h), unless an exception applies; Resolution No. 2023-XXX Page 2 of 3 WHEREAS, the compensation paid to retired annuitants cannot be less than the minimum nor exceed the maximum monthly base salary paid to other employees performing comparable duties, divided by 173.333 to equal an hourly rate; WHEREAS, the base annual salary for this position is $326,181 and the hourly equivalent is $156.82; WHEREAS, the hourly rate to be paid to Thomas R. Hatch is $156.82; WHEREAS, Thomas R. Hatch will not receive any other benefits, incentives, compensation in lieu of benefit or any other form of compensation in addition to this hourly pay rate; and WHEREAS, pursuant to Government Code section 7522.56(e)(1), Thomas R. Hatch must certify in writing to the City Council upon accepting an offer of employment that he has not received any unemployment insurance compensation arising out of prior employment with a public employer that is subject to Government Code section 7522.56 during the 12-month period preceding the effective date of this appointment. Execution of the Agreement for Interim City Manager Services shall fulfill this requirement. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The foregoing recitals are true and correct and are hereby incorporated by reference. Section 2. Thomas R. Hatch has the specialized skills needed to perform the work required of the City Manager position on an interim basis until a permanent City Manager is appointed by the City Council and thereafter begins service. Section 3. The City Council hereby appoints Thomas R. Hatch as Interim City Manager effective November 21, 2023, until the day immediately before the date on which the permanent replacement for the vacant position of City Manager begins his or her employment, unless earlier terminated, pursuant to the authority provided under Government Code sections 7522.56 and 21221(h), pending the recruitment, selection and employment of a permanent City Manager, to provide the specialized skills necessary to manage the City of Santa Ana. Section 4. The Mayor is authorized to execute an employment agreement for Interim City Manager services with Thomas R. Hatch on behalf of the City, provided that such agreement is consistent with the terms set forth in this Resolution. Resolution No. 2023-XXX Page 3 of 3 Section 5. This Resolution shall take effect immediately upon its adoption by a majority of the City Council and the City Clerk shall attest to and certify the vote adopting this Resolution. ADOPTED this ____ day of November, 2023. Valerie Amezcua Mayor APPROVED AS TO FORM: Sonia R. Carvalho City Attorney By: Laura A. Rossini Chief Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY I, Jennifer L. Hall, City Clerk, do hereby attest to and certify the attached Resolution No. 2023 -XXX to be the original resolution adopted by the City Council of the City of Santa Ana on _____________________, 2023. Date: City Clerk City of Santa Ana Interim City Manager Agreement 1 INTERIM CITY MANAGER AGREEMENT WITH THOMAS HATCH This Employment Agreement (“Agreement”) is made and entered into as of November 21, 2023, by and between the City of Santa Ana (“City”) a Charter city and California municipal corporation, and Thomas R. Hatch (“Retiree”) an individual, on the terms and conditions contained herein. City and Retiree are sometimes referred to in this Agreement individually as “Party” and collectively as “Parties.” RECITALS A. City desires to employ the services of Retiree as its Interim City Manager to carry out the duties and responsibilities of the City Manager position as provided for by the Santa Ana City Charter and Municipal Code, and applicable state law, in consideration of and subject to the terms, conditions, and benefits set forth in this Agreement. B. Retiree desires to accept employment as Interim City Manager in consideration of and subject to the terms, conditions, and benefits set forth in this Agreement. C. Retiree’s employment is authorized by Government Code Sections 7522.56 and 21221(h), which permit the City Council to appoint a California Public Employees’ Retirement System (“CalPERS”) retiree to a vacant position requiring specialized skills during recruitment for a permanent appointment, and provide that such appointment will not subject the retired person to reinstatement from retirement or loss of benefits, so long as it is a single appointment that does not exceed 960 hours in a fiscal year, inclusive of all hours worked for other all CalPERS employers, unless an exception applies. D. The City Council appointed Retiree as Interim City Manager at its November 21, 2023 meeting, as required pursuant to Government Code Section 21221(h). E. Retiree represents that he is a retired annuitant of CalPERS within the meaning of Government Code Sections 7522.56 and 21221(h) (“Statutes”) and acknowledges that his compensation is statutorily limited as provided in Government Code Section 21221(h). With the execution of this Agreement, Retiree affirms that he has not received unemployment compensation from any CalPERS Agencies during the 12-month period preceding the effective date of this Agreement. F. The City has determined that it is necessary to hire Retiree, a CalPERS retiree, because the position of Interim City Manager requires special skills, and Retiree, by virtue of his significant experience as city manager has those special skills. OPERATIVE PROVISIONS In consideration of the promises and covenants contained herein, the Parties agree as follows: Interim City Manager Agreement 2 1. Position and Duties. 1.1 Position. Retiree accepts employment with City as its Interim City Manager and shall perform all functions, duties and services set forth in Section 1.4 [Duties] of this Agreement. Retiree shall provide service at the direction and under the supervision of the City Council. It is the intent of the Parties that Retiree, as the Interim City Manager, shall keep the City Council fully apprised of all significant ongoing operations of City. Toward that end, Retiree shall report directly to the City Council and will periodically, or as may be otherwise specifically requested by the City Council, provide status reports to the City Council on his activities and those of the City. 1.2 Term. This Agreement shall become effective on November 21, 2023 unless a later date is agreed on by the Parties. This Agreement shall expire upon whichever of the following events occurs first: (i) upon the employment commencement date of a regular City Manager employed by City; or (ii) upon termination of this Agreement by either Retiree or City as provided in Section 4 [Termination] of this Agreement. 1.3 At-Will. Retiree acknowledges that he is an at-will, temporary employee of City who shall serve at the pleasure of the City Council at all times during the period of his service hereunder. Nothing in this Agreement is intended to, or does, confer upon Retiree any right to any property interest in continued employment, or any due process right to a hearing before or after a decision by the City Council to terminate his employment, except as is expressly provided in Section 1.2 [Term] or Section 4 [Termination] of this Agreement. Further, nothing contained in this Agreement shall in any way prevent, limit or otherwise interfere with the right of City to terminate the services of Retiree, as provided in Section 1.2 [Term] or Section 4 [Termination] of this Agreement. 1.4 Duties. Retiree shall perform those duties and have those responsibilities that are commonly assigned to a city manager of a city in California, and as may be further set forth in the City’s Charter and Municipal Code, as well as those duties set forth in the City’s classification specification for City Manager. 1.5 Hours of Work. Retiree shall devote the time necessary to adequately perform his duties as Interim City Manager. It is recognized that Retiree will devote a great deal of time outside the normal office hours-schedule, and to that end, he shall be allowed to establish an appropriate work schedule recognizing that the normal City work schedule is Monday through Thursday, 7:30 AM to 5:30 PM and every other Friday, 8:00 AM to 5:00 PM. However, in no event shall Retiree be required to work in excess of 960 hours per fiscal year for City, including hours worked for other CalPERS agencies during such fiscal years, unless an exception applies. The position of Interim City Manager shall be deemed a non-exempt position under federal and California wage and hour law. 2. Compensation. 2.1 Rate of Pay. For all services performed by Retiree as the Interim City Manager under this Agreement, City shall pay Retiree compensation at the rate of one hundred fifty-six Interim City Manager Agreement 3 dollars and eighty-two cents ($156.82) per hour, according to the payroll schedule in place for City employees paid bi-weekly subject to the limitations provided below. 2.1.1 Compliance with CalPERS requirements. It is the intent of the Parties to compensate Retiree only to the extent permitted under Government Code section 21221(h) and corresponding CalPERS regulations and policy statements. The Rate of Pay set forth above is based on the salary limitations established by Ca1PERS and is not less than the minimum, nor in excess of the maximum, paid by the City to other employees performing comparable duties (divided by 173.333 to equal an hourly rate) as listed on the City’s publicly-available pay schedule. Such compensation shall be Retiree’s sole compensation for his service under this Agreement. Notwithstanding the foregoing, the City shall cover the Retiree under its workers’ compensation program. 2.1.2 Recordation and Reporting of Hours Worked. Retiree will comply with all applicable CalPERS regulations governing employment after retirement, including the recordation and reporting of all hours worked for City to Ca1PERS as may be required. City shall assist in any such reporting obligations to Ca1PERS. Additionally, Retiree shall keep City continually apprised of any hours worked by Retiree for other CalPERS agencies during the term of this Agreement. 2.2 Benefits. 2.2.1 No Benefits. Pursuant to Government Code §21221(h) and related CalPERS regulations and policy statements, Retiree shall not receive from City any benefits City commonly provides to its employees unless required by federal or state law, including without limitation, health, dental, or vision insurance coverage, life insurance, deferred compensation, disability insurance, unemployment insurance, mobile device stipend, vehicle allowance, gym programs, employee assistance programs, and similar benefits. 2.3 Reimbursement. City shall reimburse Retiree for authorized, reasonable and necessary travel expenses incurred by Retiree in the performance of his duties pursuant to this Agreement. Retiree shall document and claim said reimbursement for such travel in the manner and forms required by the City. All reimbursements shall be for actual expenses and shall be subject to and in accordance with California and federal law and City’s adopted reimbursement policies. Such reimbursements shall not be reported to CalPERS. Other than as specifically provided herein, Retiree shall receive no other compensation or reimbursements for expenses incurred by him in the performance of his duties pursuant to this Agreement. 3. Vacation and Leave. 3.1 No Leave. Retiree and City agree that Retiree, in accordance with Government Code Section 21221(h) and related Ca1PERS regulations and policy statements, shall not be provided or accrue any personal time off, vacation, sick leave, management time off, paid holidays or similar leave benefits, unless required by federal or state law. Interim City Manager Agreement 4 4. Termination. 4.1 By City. This Agreement may be terminated by City for any reason thirty (30) days after providing written notice to Retiree of such termination. City’s only obligation in the event of such termination will be payment to Retiree of all compensation then due and owing as set forth in Section 2.1 [Rate of Pay] up to and including the effective date of termination. However, this Agreement may be terminated immediately if necessitated by changes to CalPERS statutory or regulatory requirements, or if doing so will preclude a violation of Government Code Sections 7522.56 or 21221(h). 4.2 By Retiree. This Agreement may be terminated by Retiree for any reason thirty (30) days after providing written notice to City of such termination. City shall have the option, in its complete discretion, to make Retiree’s termination effective at any time prior to the end of such period, provided City pays Retiree all compensation as set forth in Section 2.1 [Rate of Pay] then due and owing him through the last day actually worked. 4.3 No Notice for Expiration. Nothing in this Section 4 [Termination] shall be construed to require either party to give advance written notice in order for the Agreement to expire as set forth in Section 1.2 [Term]. 4.4 Termination Obligations. Retiree agrees that all property, including, without limitation, all equipment, tangible Proprietary Information (as defined below), documents, records, notes, contracts, and computer-generated materials furnished to or prepared by him incident to his employment belongs to City and shall be returned promptly to City upon termination of Retiree’s employment. Retiree’s obligations under this subsection shall survive the termination of his employment and the expiration of this Agreement. 5. Confidential Information. “Confidential Information” shall include, but not be limited to, all information or material that Retiree learns of or obtains during his employment with City as Interim City Manager that is or was confidential or privileged by virtue of it having been discussed or presented in a duly- noticed closed session meeting of the City Council, or otherwise privileged and/or confidential under applicable law, including but not limited to personnel information, information pertaining to on-going or potential litigation, information learned in the context of the attorney-client relationship with the City Attorney or special counsel to the City. Confidential Information as defined includes, but is not limited to, all data, materials, products, technology, computer programs, specifications, manuals, business plans, software, marketing plans, financial information, internal processes and procedures, and other information disclosed or submitted, orally, in writing, or by any other media, to Retiree by City. Nothing herein shall require City to disclose any of its information to Retiree. During his employment with City as Interim City Manager, Retiree shall use and disclose Confidential Information only for the benefit of City and as is, or may be, necessary to perform his job responsibilities under this Agreement. Following the termination of this Agreement, Retiree shall not use or disclose any Confidential Information, except with the express written consent of Interim City Manager Agreement 5 City. Retiree’s obligations under this Section shall survive the termination of his employment and the expiration of this Agreement. 6. Conflict of Interest. To the extent that Retiree has an interest, direct or indirect, financial or otherwise, which would materially conflict, as shall be determined by the City Attorney, in any manner or interfere in any way with the performance of services under this Agreement, Retiree shall notify the Mayor of the conflict in advance of, and shall refrain from participating in, any action to be taken by the City on such matter. 7. General Provisions. 7.1 Recitals. The recitals, inclusive of all facts and representations, are incorporated into this Agreement as if set forth in the Operative Provisions. 7.2 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be effective upon delivery by hand or three (3) business days after deposit in the United States mail, postage prepaid, certified or registered, and addressed to City at the address below, and or at the last known address maintained in Retiree’s personnel file. Retiree agrees to notify City in writing of any change in her address during his employment with City. Notice of change of address shall be effective only when accomplished in accordance with this Section. To City: City of Santa Ana Attention: Mayor 20 Civic Center Plaza, M-30 P.O. Box 1988 Santa Ana, California 92702 With a Copy to: City of Santa Ana Attention: City Attorney 20 Civic Center Plaza, M-29 P.O. Box 1988 Santa Ana, California 92702 To Retiree: Mr. Thomas R. Hatch [Address on file] Interim City Manager Agreement 6 7.3 Indemnification. Subject to, in accordance with, and to the extent provided by the California Government Claims Act [Government Code Section 810 et seq.], City will indemnify, defend, and hold Retiree harmless from and against any action, demand, suit, monetary judgment or other legal or administrative proceeding, and any liability, injury, loss or other damages, arising out of any act or omission occurring during Retiree’s tenure as Interim City Manager, except that this provision shall not apply with respect to any intentional tort or crime committed by Retiree, or any actions outside the course and scope of his employment as Interim City Manager. City shall obtain and keep in full force and effect liability insurance, or risk pool coverage, including errors and omissions coverage on a “per occurrence” basis, in sufficient amounts to ensure fulfillment of this hold harmless and indemnification clause. 7.4 Bonding. City shall bear the full cost of any fidelity or other bonds required of the Interim City Manager under any law or ordinance. 7.5 Integration. This Agreement is intended to be the final, complete, and exclusive statement of the terms of Retiree’s employment by City. This Agreement supersedes all other prior and contemporaneous agreements and statements, whether written or oral, express or implied, pertaining in any manner to the employment of Retiree, and it may not be contradicted by evidence of any prior or contemporaneous statements or agreements. To the extent that the practices, policies, or procedures of City, now or in the future, apply to Retiree and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control. 7.6 Amendments. This Agreement may not be amended except in a written document signed by Retiree, approved by the City Council and signed by the City’s Mayor. 7.7 Waiver. Failure to exercise any right under this Agreement shall not constitute a waiver of such right. 7.8 Assignment. Retiree shall not assign any rights or obligations under this Agreement. City may, upon prior written notice to Retiree, assign its rights and obligations hereunder. 7.9 Severability. If a court or arbitrator holds any provision of this Agreement to be invalid, unenforceable, or void, the remainder of this Agreement shall remain in full force and effect. 7.10 Attorneys’ Fees. In any legal action, arbitration, or other proceeding brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs. 7.11 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, with venue proper only in Orange County, State of California. 7.12 Interpretation. This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party. By way of example and not in limitation, this Agreement shall not be construed in favor of the party receiving a benefit nor against the party Interim City Manager Agreement 7 responsible for any particular language in this Agreement. Captions are used for reference purposes only and should be ignored in the interpretation of the Agreement. This Agreement may be altered, amended or modified only by an instrument in writing, executed by the Parties to this Agreement and by no other means. Each party waives their future right to claim, contest or assert that this Agreement was modified, cancelled superseded or changed by any oral agreement, course of conduct, waiver or estoppel. 7.13 Acknowledgment. Retiree acknowledges that he has had the opportunity to consult legal counsel in regard to this Agreement, that he has read and understands this Agreement, that he is fully aware of its legal effect, and that he has entered into it freely and voluntarily and based on his own judgment and not on any representations or promises other than those contained in this Agreement. IN WITNESS WHEREOF, City has caused this Agreement to be signed and executed on its behalf by its Mayor and duly attested to by its City Clerk, and Retiree has signed and executed this Agreement, as of the date first indicated above. RETIREE: CITY OF SANTA ANA ________________________ _________________________ THOMAS R. HATCH VALERIE AMEZCUA Mayor APPROVED AS TO FORM: ATTEST: _______________________ _________________________ SONIA R. CARVALHO JENNIFER L. HALL City Attorney City Clerk for